A WANING STAR?

Evening Star, Issue 21508, 5 September 1933, Page 9

A WANING STAR?

MR MONTAGU NORMAN BANK AND GOVERNMENT INFLATION IN BRITAIN In and around the World Economic Conference things have happened which are intensely interesting. So, for example, the detached observer has been able to study the relationship between the Government and the Bank of England (writes “ Augur,” in the ‘New York Times’).

Mr Montagu Norman, the governor of the bank, has been re-elected to that post for so many years that his occupation of it resembles a permanency. In tho City, in his case, he personifies the institution. Since the war, and especially since the Genoa Conference, Mr Norman has been the dominant influence in British politics, for his work was law for the Treasury. In 1924 he sat at the side of the Chancellor of the Exchequer, when the conditions of the Dawes settlement of German reparations payments was discussed, and, generally speaking, in the last ten years there comes to mind no occasion when a decision has been taken by the Government against the advice of the governor of the bank. The stabilisation of tho pound in 1925 at the high level of parity with gold was carried out at Mr Norman’s behest, and the leaders of British industries, who saw the destruction of their hope of an expansion of their foreign markets, accepted the decision practically without any public protest. INTIMACY WANES. The fall of the pound from grace two years ago, however, shook the hegemony of the bank. The voice of the industrial and protectionist North could assert itself against that of the international and freetrading South. Mr Norman’s position, strong as ever in his feudal stronghold of the City, became weaker in the rest of the land. The consequences of the change have come to light at the conference. Mr Norman threw hi weight on the side of immediate stabilisation of currencies, and the Government refused to follow him in that direction. The intimate link between the Treasury and tho bank, for the time at least, has ceased to exist. Or rather th© influence of the governor over the official policy has ceased to exist. This fact is significant and, if it endures, of which there is no certainty, the whole aspect of British politics may undergo a profound change. If the lead given by America is not belied too quickly by unfavourable results it may be found that the British Government is not opposed to a wellconsidered and perfectly controlled system of inflation of credit, especially for industrial undertakings. The bank remains irrevocably opposed to, such a course. Hence the possibility of a conflict in the not too distant future between these contradictory points of view.

Another discovery due to the development of events at the conference is that tho preconceived view on the “sterling bloc” as a means of strengthening the Empire needs to be reconsidered. It has been demonstrated to all, except those who deliberately refuse to see the obvious, that Canaria moves in the orbit not of tho pound, but of the dollar.

THE NECESSITY. At the conference it has generally been said that the choice for the British delegation was between the “gold bloc ” of Europe and the United States. This is not quite so, for in the prevailing circumstances it was perfectly clear that, sympathies apart, the interest of Great Britain demanded the maintenance Of the American connection, liecause otherwise, in the case of a direct conflict, Canada would bo lorced to destroy Imperial unity by siding with the American thesis. For the inture this moans that the British Empire necessarily must go on maintaining a good 'understanding with .the United States. Otherwise its unity will be difficult to preserve intact. On the other hand, this conference equally has proved that the intrinsic unity "of the European Continent in tho economic sense is not merely an academic formula but a practical fact. When Mr Bennett, defending the American position against tho so : called “gold bloc,” demanded a vote in the Monetary Commission he believed that the French delegation would muster five partisans at the most. It mustered fifteen. . It is true that the opposing point of view obtained the majority by receiving twenty-five votes, but this majority was constituted of elements of widely different values. The. British delegation, for example, obtained po

comfort from the fact that its view was backed by Haiti, San Domingo, and Ecuador in the company of Siam and Persia. But the fifteen of the “ gold bloc ” represented the homogeneous European group, and it is worth noting that Germany and Italy, xisuaJly not inclined to back the French in any way when their view is at variance with that of the British, on this occasion threw in their lot whole-heartedly with them. HOW THE WIND BLOWS. No Pact of Four, and no other diplomatic artifice was necessary to produce the united front of Europe at the Conference. This for the British Government is a valuable indication of how the wind blows on the Continent _ today. We also know that the. meeting, which followed in Paris, of the central banks of the “ gold bloc ” States whs one of the most satisfactory ever held since the war, and that a common policy of defence against currency speculators was established with the greatest ease. Events are stronger than men, and it is evident that the situation in Europe is such that it drives all these States with widely divergent interests and temperaments into one camp for united action. Any British Government which neglects taking into account this significant fact cannot expect to maintain its prestige in the domain of international relations. The conference also has helped to throw light upon the fact that public opinion has ceased to expect from official intervention the cure for the economic ills of the world. British public opinion certainlyplaces its reliance upon individual effort and upon the interplay of natural forces, and no longer upon Ministerial action or upon the formulas of experts. The conference has strengthened the process of political transformation in Britain. Though at the first glance it may appear as curious, it is not impossible that the emptiness of the discussions at the conference may contribute to the defeat of Mr MacDonald in his constituency at Seaham.